Jill Krasny at Business Insider came up with these dozen examples of false economies. I have summarized them below [and added a few comments of my own in square brackets].
Hitting the vending machine for cheap snacks
It’s expensive food, bad for the waistline, and more likely to harm your health than groceries (which are also more nutritious).
Going the poor man's divorce route to save $20,000
A good lawyer is needed to leave the parties clean of the past, including custody battles, tax filings, care payments, foreclosed homes, and other latent credit risks. Staying married and hating each other is no picnic (and not necessarily a bargain) either.
Upping your insurance deductible to save upfront
An unexpected event can cost you hundreds of thousands of dollars.
[exception by the blog author: As a CPA I content that by owning a cheap used car purchasec for less than $4,000, keeping it in tip-top shape, and skipping the liability insurance is a good bargain if you have gone YEARS without any accidents…]
Opting for layaway to feel like a saver
Layaway is a marketing ploy to get you to buy! It’s not a way to manage money.
Choosing a variable rate mortgage (ARM) for the lower monthly payment
The supposed advantag of a variable rate mortgage is a lower initial payment. But the savings come at the risk of higher payments because of higher interest in the future – a factor that is entirely out of your control. A fixed rate mortgage bypasses this unnecessary and potentially prohibitive risk.
Overpaying for extended warranties
The extended warranty wouldn’t be offered if they didn’t make money off it – so it is classicly a bad purchase and a waste of money.
However, if you are clumsy with laptops, consider the extended warranty [especially since a laptop is the most notoriously unreliable major appliance widely owned today – as opposed to desktop computers which seldom break down].
Overspending on bulk purchases to cut the grocery bill
It’s tempting to buy more than you can use, but it turns your house into a warehouse, it may go bad before it is used, or it may make you sick of it through repeated use or monotony.
Skipping the dentist (and other health visits) to pocket the co-pay
Teeth get more and more rotten when not treated. If you don’t have the money, look for a visiting or free dental clinic or for a dental or hygienist school within commuting distance.
Splurging on daily deals to feel thrifty
Daily deals aren’t a bargain unless it is something you need and will use right now. That’s unlikely – it is a "daily deal" because not enough people are buying them!
Shirking your pet's health to beat the vet bill
Doing so risks very expensive pet emergency care and a hideous, ghostly guilt trip by you, the pet owner. Your pets life depends entirely on you.
Not getting a prenup to stave off attorneys' fees
Anytime an outcome can be planned and reasoned out, that process is superior to litigation and court appearances. [See also the recent blog entry on the advisability of prenup planning].
Leasing a car to avoid the mileage penalty
Leasing usually runs for three years and 36,000 miles with penalties for mileage above that figure. If you know you will drive more than that – pay upfront!
Or buy the car rather than leasing it, so you won’t have to worry.
= = = = = = = = = = = = = = = = = = = = = = =
Summarized [with a few additions] from:
-- http://finance.yahoo.com/news/12-times-that-being-cheap-will-cost-you.html
Hitting the vending machine for cheap snacks
It’s expensive food, bad for the waistline, and more likely to harm your health than groceries (which are also more nutritious).
Going the poor man's divorce route to save $20,000
A good lawyer is needed to leave the parties clean of the past, including custody battles, tax filings, care payments, foreclosed homes, and other latent credit risks. Staying married and hating each other is no picnic (and not necessarily a bargain) either.
Upping your insurance deductible to save upfront
An unexpected event can cost you hundreds of thousands of dollars.
[exception by the blog author: As a CPA I content that by owning a cheap used car purchasec for less than $4,000, keeping it in tip-top shape, and skipping the liability insurance is a good bargain if you have gone YEARS without any accidents…]
Opting for layaway to feel like a saver
Layaway is a marketing ploy to get you to buy! It’s not a way to manage money.
Choosing a variable rate mortgage (ARM) for the lower monthly payment
The supposed advantag of a variable rate mortgage is a lower initial payment. But the savings come at the risk of higher payments because of higher interest in the future – a factor that is entirely out of your control. A fixed rate mortgage bypasses this unnecessary and potentially prohibitive risk.
Overpaying for extended warranties
The extended warranty wouldn’t be offered if they didn’t make money off it – so it is classicly a bad purchase and a waste of money.
However, if you are clumsy with laptops, consider the extended warranty [especially since a laptop is the most notoriously unreliable major appliance widely owned today – as opposed to desktop computers which seldom break down].
Overspending on bulk purchases to cut the grocery bill
It’s tempting to buy more than you can use, but it turns your house into a warehouse, it may go bad before it is used, or it may make you sick of it through repeated use or monotony.
Skipping the dentist (and other health visits) to pocket the co-pay
Teeth get more and more rotten when not treated. If you don’t have the money, look for a visiting or free dental clinic or for a dental or hygienist school within commuting distance.
Splurging on daily deals to feel thrifty
Daily deals aren’t a bargain unless it is something you need and will use right now. That’s unlikely – it is a "daily deal" because not enough people are buying them!
Shirking your pet's health to beat the vet bill
Doing so risks very expensive pet emergency care and a hideous, ghostly guilt trip by you, the pet owner. Your pets life depends entirely on you.
Not getting a prenup to stave off attorneys' fees
Anytime an outcome can be planned and reasoned out, that process is superior to litigation and court appearances. [See also the recent blog entry on the advisability of prenup planning].
Leasing a car to avoid the mileage penalty
Leasing usually runs for three years and 36,000 miles with penalties for mileage above that figure. If you know you will drive more than that – pay upfront!
Or buy the car rather than leasing it, so you won’t have to worry.
= = = = = = = = = = = = = = = = = = = = = = =
Summarized [with a few additions] from:
-- http://finance.yahoo.com/news/12-times-that-being-cheap-will-cost-you.html
No comments:
Post a Comment